Currently, Slovenia is grappling with the aftermath of severe flooding that has left an impact on various sectors of its economy, while June & July were marked by severe storms with wind and hail. Among those affected are some Slovenian blue chip companies, which have had to navigate a challenging landscape brought about by the flooding. This article delves into the ways in which the recent flood has influenced these companies and their financials.
Insurances
Obviously, insurance companies don’t want any risk they are insuring against, to materialize. Consequently, current weather inconveniences in the region will negatively impact their business. Now if you also have an insurance company that is quoted on the stock exchange, it is more than clear what will happen to people valuing its stock price. We could see two big insurance companies in Slovenia, Triglav and Sava Re, losing around 10% of their market capitalization in the span of two days, which is relatively rarely seen for companies within the insurance sector. However, in the upcoming trading days, prices slightly retraced for both companies and stabilized at those levels – telling us that market slightly overreacted due to the high uncertainty.
Triglav & Sava Re YTD share price development
Source: Bloomberg, InterCapital Research
Regarding the aforementioned CAT events, both insurance companies published a notice on Ljubljana Stock Exchange. Triglav stated that this year’s CAT claims will deviate significantly from their long-term average, negatively affecting on the Group’s planned annual result. However, Triglav noted that the impact will be limited due to Group’s adequate reinsurance protection. Finally, it was noted that a more detailed assessment of damage will be possible after these events come to an end and when assessing the damage will be possible.
Further, Sava also published a statement on the first estimate of the impact of storm and flood claims. Although firstly it was emphasized that the possible assessment of the incurred claims will not be able until the situation is fully contained, Sava Re published their first estimate of the impact nevertheless. Taking into account the reinsurance cover in place, the first estimated impact will be in the range of app. EUR 20 – 25m, but will be subject to further review. To put things in perspective, in its Business plan for FY 2023, Sava Re estimated a net profit of more than EUR 53m. In this context, we can see that the mentioned impact of storms & floods should not be overlooked. Below we present you with an achieved net profit for 2022, the value of the first estimate on impact and the estimate from the business plan of Sava, published during December 2022.
Finally, the last blue chip on Ljubljana Stock Exchange that published its impact from flooding is Cinkarna Celje. Cinkarna notified that at its Mozirje plant, which produces coating and masterbatches, storage areas were flooded. The company estimated its economic loss in terms of raw materials and finished product inventories in the range of EUR 510 – 620k. To put things in perspective, this business unit contributed app. 5% to the Group’s net profit for FY 2022. Finally, the company did not suffer any damage during the floods at the most significant production site in Celje.
Cinkarna Celje YTD share price development
Source: Bloomberg, InterCapital Research
On Friday, Fondul Proprietatea held its GSM, during which RON 1.7225 DPS was approved, instead of the initially proposed RON 1.4942. At FP’s closing price a day before, this would amount to a DY of 90%. The ex-date is set for 7 September 2023.
According to the press release by Fondul Proprietatea, during its GSM held on Friday, a special dividend of RON 1.7225 was approved, stemming from the cash received from the IPO of Hidroelectrica on the exchange. In total, this would mean that RON 9.28bn will be paid out in the form of dividends. Initially, Fondul Proprietatea proposed RON 1.4942 DPS, which would imply a DY of 79.8%. During the meeting, the aforementioned RON 1.7225 DPS was approved instead, which at the closing price on the day before, would amount to a DY of 90%.
The ex-date for the dividend payment is set for 7 September 2023, while the payment date is set for 29 September 2023. Below we provide you with Fondul’s historical dividends and dividends per share.
Fondul Proprietatea dividends per share (RON) and dividend yields (%) (2018 – 2023)
Source: Fondul Proprietatea, InterCapital Research
In H1 2023, Nuclearelectrica recorded revenue growth of 19% YoY, EBITDA growth of 16%, and a net income of RON 1.29bn, an increase of 6% YoY.
In terms of revenue, revenue from the sale of electricity increased by 19% YoY and amounted to RON 3.67bn, supported by the 21.5% increase in the weighted average price of electricity (including Tg), while the quantity of electricity sold decreased by 1.3%. In terms of production, Nuclearelectrica managed to produce 4,920 GWh of electricity, an increase of 3% YoY.
Breaking the electricity sales further, the Company sold 2,107,985 MWh at the price of RON 450/MWh (the upper limit after which 100% tax is applied) to MACEE (“Centralized Electricity Acquisition Mechanism), representing 42.52% of the total electricity sold. Meanwhile, the amount of electricity sold on the competitive market of bilateral contracts decreased by 48.7% YoY, accounting for 43.32% of the total sold quantity, while the average sale price on this market increased by 108.5% YoY. Lastly, the amount of electricity sold by the Company on the spot market decreased by 16.4% YoY, accounting for 13.8% of the total sold quantity, while the avg. sale price on this market decreased by 48.5%.
Moving on to op. expenses, they amounted to RON 2.47bn, an increase of 42% YoY. The main contribution to the OPEX growth came from the contribution to the Energy Transition Fund, which pertains to the aforementioned 100% tax on revenue above RON 450/MWh. This category grew by 149.5% YoY and amounted to RON 1.46bn. In terms of the EBITDA, the Company recorded an EBITDA of RON 1.63bn, representing a decrease of 4.7% YoY, mainly as a result of strong OPEX growth. This would also imply an EBITDA margin of 44.3%, a decrease of 1.15 p.p. YoY. Moving on to the net financial result, it amounted to RON 209.5m, an increase of 316.7% YoY, supported by higher financial income (RON 222.8m, +241.6% YoY), and slightly lower financial expenses (RON 13.3m, -11.3% YoY). All of this combined led to a net profit of RON 1.29bn, an increase of 5.6% YoY, implying a net profit margin of 35.1%, a decrease of 4.4 p.p. YoY, mainly as a result of faster cost than revenue growth.
Nuclearelectrica key financials (H1 2023 vs. H1 2022, RONm)
Source: Nuclearelectrica, InterCapital Research
In terms of investments, the Company plans on investing app. RON 1.35bn during 2023, an increase of 91% YoY. This includes investments into Cernavoda NPP Branch, NFP Pitesti Branch and the Central Headquarters estimated to be completed by the end of the year, as well as investment objectives to be completed in the following years.